ALL issues relating to the bond issue and club finances

[CheckOne]

There's no need to take it though. That's the key point. We were told that the Glazers needed to take those dividends to pay down the PIK debt. They didn't.

OK, so a financial services blogger got it wrong, he can only report based on the information that is freely available to him and make assumptions based on the unknowns, just like any finance bloke he has eye-balls, not crystal balls. I'm sure we'd all like to know where the money has come from, but that isn't likely to happen until the next quarterly results, if at all.

They will take money out of the club at some point and have provided themselves with a vehicle to do so, i.e. the bond issue. Again, these guys are not running United as a charity, they're running it as a business, so of course they will take money out at some point. The amount and the extent to which it restricts progress will be the decisive factor to many.

 

[phelans shorts]

A pm I just received regarding mine and crerands discussion earlier.

It was from Red Issue originally, the reason it came about is often ignored though. It was a response to the way the stewards in the ground were trying to stop people protesting, taking banners away and ejecting people who tried to put anti Glazer banners up.

The club then said something about it being a small minority who had a problem with the Glazers, so Chatmaster on RI suggested using the original Newton Heath colours as a protest because they couldn't eject people for wearing a different colour scarf or shirt.

Since then it may have been hijacked by quite a few people, but the original point of it was about the right to protest.

 

[Crerand Legend]

A pm I just received regarding mine and crerands discussion earlier.

Fair enough, I did admit I was unsure

 

[GCHQ]

OK, so a financial services blogger got it wrong, he can only report based on the information that is freely available to him and make assumptions based on the unknowns, just like any finance bloke he has eye-balls, not crystal balls. I'm sure we'd all like to know where the money has come from, but that isn't likely to happen until the next quarterly results, if at all.

They will take money out of the club at some point and have provided themselves with a vehicle to do so, i.e. the bond issue. Again, these guys are not running United as a charity, they're running it as a business, so of course they will take money out at some point. The amount and the extent to which it restricts progress will be the decisive factor to many.

But they won't take money out of the club if it's likely to restrict progress. It doesn't make any sense to restrict the progress of a £1bn+ asset unless you have to. And that's why it's very important that the Glazers were able to pay down the PIK debt without using the club's cash. It shows they have options. It shows us they won't need to take out anything like the sort of levels of cash that people were telling us they would. Ultimately they're in this for long term capital appreciation of their asset.

Anders admits himself that he should have been far less adamant that there was only one way the Glazers were going to pay down the PIKs. There were other options available and he failed to give them enough consideration and inform people about them. But then I think we all know why that was.

 

[Rood]

Exactly. Unless we know how they were repaid, there is absolutely no way we can make a call on whether things are now better, worse or just the same.

That is where I disagree entirely - regardless of the source of repaying the PIK, things are better as far as I am concerned.

It is true that we need to know more detail to understand if it is a massive improvement or just marginally better but either way it is a step in the right direction.
I know you like to go out of your way to come up with hypothetical worst case scenarios, but even you should be able to see that this is good news for the club and our fans. If you cant accept that then there is no hope of having a rational discussion and we should just leave it there.

 

[Crerand Legend]

That is where I disagree entirely - regardless of the source of repaying the PIK, things are better as far as I am concerned.

It is true that we need to know more detail to understand if it is a massive improvement or just marginally better but either way it is a step in the right direction.
I know you like to go out of your way to come up with hypothetical worst case scenarios, but even you should be able to see that this is good news for the club and our fans. If you cant accept that then there is no hope of having a rational discussion and we should just leave it there.

Things are better perhaps with the news last week and it is probably a step in the right direction, the size of the step is the problem. It can hardly be described as a huge step if the debt has been replaced with new debt albeit with more favourable terms, the debt wiped out would be a huge step

 

[Dr. Dwayne]

the debt wiped out would be a huge step

I'm sure people would be more vitriolic because then the Glazers would take their dividend and therefore taking money from the club. It's a no-win situation, really. Locals don't like the idea of Americans owning their club, imo that's what it boils down to.

 

[Sir A1ex]

That is where I disagree entirely - regardless of the source of repaying the PIK, things are better as far as I am concerned.

It is true that we need to know more detail to understand if it is a massive improvement or just marginally better but either way it is a step in the right direction.
I know you like to go out of your way to come up with hypothetical worst case scenarios, but even you should be able to see that this is good news for the club and our fans. If you cant accept that then there is no hope of having a rational discussion and we should just leave it there.

So it's gone from being the definitive proof that all worries about the PIK debt were totally unfounded to being an improvement of unknown degree in our situation, possibly only marginal?

Yeah, I'd agree with that, glad you're finally dropping the crazed rhetoric and making sensible observations instead.

 

[Rado_N]

I'm sure people would be more vitriolic because then the Glazers would take their dividend and therefore taking money from the club. It's a no-win situation, really. Locals don't like the idea of Americans owning their club, imo that's what it boils down to.

I don't think nationality has anything to do with it. If a family of Mancunians had come in and done the exact same thing they'd have been every bit as hated. There would just be a different set of songs sung and insults thrown.

 

[Crerand Legend]

I'm sure people would be more vitriolic because then the Glazers would take their dividend and therefore taking money from the club. It's a no-win situation, really. Locals don't like the idea of Americans owning their club, imo that's what it boils down to.

Nationality wouldn't be a factor me, if the Glazer family did away with the debt tomorrow I would have no problem at all with them, now trouserless gun slinging Canadians I would have a problem with

 

[Dr. Dwayne]

I don't think nationality has anything to do with it. If a family of Mancunians had come in and done the exact same thing they'd have been every bit as hated. There would just be a different set of songs sung and insults thrown.

The Glazers LBO is likely not that different that what the RKs had planned.

With the sheer magnitude of the LBO I reckon the Glazers are doing a bang up job. At the very least they've shed the exorbitant interest rate of the PIK notes and had a successful bond issue, buying the club years of security in the process. (I recognize the counter argument that "if they hadn't bought the club..." but a PLC is always under threat of a takeover, that's the nature of the beast, why not blame the PLCs shareholders?)

I reckon the worst that can happen for them now is that they are unsuccessful with a second bond issue around 2016 and they sell up.

Seems to me that their opponents are inventing any old excuse to be angry; debt, PIKS, potential dividends, not buy superstar players, etc. The list will grow as they see fit.

 

[Dr. Dwayne]

Nationality wouldn't be a factor me, if the Glazer family did away with the debt tomorrow I would have no problem at all with them, now trouserless gun slinging Canadians I would have a problem with

They seem to be doing a good job of managing it, though. Surely everyone knows that rich people do everything they can to avoid spending their own money? It is detrimental to the club, absolutely but so far any argument that this is true would be spectacularly countered by results on the pitch.

Speaking of other people's money, I am taking donations to outfit a RedCafe Army, please send me a pm if you are interested.

 

[Crerand Legend]

The Glazers LBO is likely not that different that what the RKs had planned.

With the sheer magnitude of the LBO I reckon the Glazers are doing a bang up job. At the very least they've shed the exorbitant interest rate of the PIK notes and had a successful bond issue, buying the club years of security in the process. (I recognize the counter argument that "if they hadn't bought the club..." but a PLC is always under threat of a takeover, that's the nature of the beast, why not blame the PLCs shareholders?)

I reckon the worst that can happen for them now is that they are unsuccessful with a second bond issue around 2016 and they sell up.

Seems to me that their opponents are inventing any old excuse to be angry; debt, PIKS, potential dividends, not buy superstar players, etc. The list will grow as they see fit.

But Doc have the old excuses as you call them been adressed? No is the likely answer and that is why this thread never goes away, it seemed we were getting some where last week but now it would seem the likehood is that we have just moved the debt around. The situation as a consquence is still far from ideal not matter what way it is spun

 

[Rado_N]

The Glazers LBO is likely not that different that what the RKs had planned.

With the sheer magnitude of the LBO I reckon the Glazers are doing a bang up job. At the very least they've shed the exorbitant interest rate of the PIK notes and had a successful bond issue, buying the club years of security in the process. (I recognize the counter argument that "if they hadn't bought the club..." but a PLC is always under threat of a takeover, that's the nature of the beast, why not blame the PLCs shareholders?)

I reckon the worst that can happen for them now is that they are unsuccessful with a second bond issue around 2016 and they sell up.

Seems to me that their opponents are inventing any old excuse to be angry; debt, PIKS, potential dividends, not buy superstar players, etc. The list will grow as they see fit.

Like you say though, they may be managing it as well as possible in the circumstances but they put us in those circumstances. I don't want to get into the whole debate because it's been done to death, but I don't accept the premise that their being Americans is the reason for the dislike towards them. It's used against them by some but that would be the same no matter where they were from.

 

[Crerand Legend]

They seem to be doing a good job of managing it, though. Surely everyone knows that rich people do everything they can to avoid spending their own money? It is detrimental to the club, absolutely but so far any argument that this is true would be spectacularly countered by results on the pitch.

Speaking of other people's money, I am taking donations to outfit a RedCafe Army, please send me a pm if you are interested.

No prob as long as some of the money goes on trousers. As for the Glazers not using their own money I fully accept this is the way modern businessmen operate but the interest drain on the club has been hugely detrimental to every aspect of the club

 

[Dr. Dwayne]

But Doc have the old excuses as you call them been adressed? No is the likely answer and that is why this thread never goes away, it seemed we were getting some where last week but now it would seem the likehood is that we have just moved the debt around. The situation as a consquence is still far from ideal not matter what way it is spun

The initial loans were addressed by a bond issue, standard practice for companies....it's known as fundraising and is very secure. Still, it's an issue for some but it isn't really unti lthey come due, that's over five years from now. The immediate future is quite secure, fiscally.

The 16.25% PIKs have been wiped out and are not associated with the club whatsoever, does it matter where the funds came from? A credit facility is still considered as "means to repay" something, even if it is not ideal. Creditors don't care, just so long as they get paid. So far, the proof is in the pudding.

We haven't seen much in way of dividends being withdrawn, even though the owners are entitled to it (that should be seen as a plus and that they care about the stability of the club), of course, that may have been hampered by all the money spent on interest payments and refinancing, this is a valid gripe.

And finally, we've never really gone after a lot of big names in the manner of Madrid. What more do they have to do? It cost a lot of money to become owners of this great club and where it matters the club is doing great things.

I really think they are damned if they do and damned if they don't.

Like you say though, they may be managing it as well as possible in the circumstances but they put us in those circumstances. I don't want to get into the whole debate because it's been done to death, but I don't accept the premise that their being Americans is the reason for the dislike towards them. It's used against them by some but that would be the same no matter where they were from.

They did but they're not the only ones responsible. Not everyone who is worth more than a billion pounds is willing to put their assets on the line for something as fiscally unrewarding as owning a football club. The Glazers took a risk and seem to be reaping rewards, it's commendable. Nobody believed it could be done. With so much settled fiscally we really can only wait until the bonds are about to come due, no point in arguing it'd be better to start collecting money with a view to being a viable part of any future bids.

 

[Dr. Dwayne]

No prob as long as some of the money goes on trousers. As for the Glazers not using their own money I fully accept this is the way modern businessmen operate but the interest drain on the club has been hugely detrimental to every aspect of the club

What about hot-pants?

I have actually validated the last part of your post in the above response. I agree with you there but surprisingly results haven't suffered too much even with the club bleeding funds. It's hard to prove the interest payments and financial charges have been overly detrimental, we might have to wat until the next round of accounts get published.

 

[Sir A1ex]

why not blame the PLCs shareholders?

Because they are now powerless to do anything. This is about trying to effect change, not trying to apportion blame.

If the Glazers fecked off tomorrow, then I wouldn't sit around whinging and blaming them for any residual problems, I would happily never think of them again.

 

[Pogue Mahone]

You're completely missing the point A1Dan. Let's try again shall we. The key point is that the PIK debt never was the club's responsibility. Some people said it was and that the club would be forced to service that debt. The fact the club's assets and cash weren't used to repay the PIK debt is yet further proof that the club is not responsible for that debt and never was. Have you got that?

Gill says the club cash wasn't used to pay off the PIks. At no point does he deny the club assets being used as security against an additional loan used to pay them down.

 

[Rood]

So it's gone from being the definitive proof that all worries about the PIK debt were totally unfounded to being an improvement of unknown degree in our situation, possibly only marginal?

Yeah, I'd agree with that, glad you're finally dropping the crazed rhetoric and making sensible observations instead.

There are 2 different issues here.
One is about what the news about the PIK means for the club. As I said, I feel it is good news regardless of where the money came from, but without the details we cant judge just how good the news is.

The other is about the point of view that had previously been put forward by MUST/andersred/etc and it is on that score that people like myself have every right to gloat as they have been proven to be completely wrong (and not for the first time either).

 

[GCHQ]

Gill says the club cash wasn't used to pay off the PIks. At no point does he deny the club assets being used as security against an additional loan used to pay them down.

Oh come on.

"I have been saying for years that they (the PIK notes) were nothing to do with the club and they weren't."

If it then turns out that the club's assets were used as security for a new loan to repay that PIK debt then how can Gill possibly justify the above statement. He can't, so he wouldn't have said it if that was the case.

 

[Rood]

Gill says the club cash wasn't used to pay off the PIks. At no point does he deny the club assets being used as security against an additional loan used to pay them down.

Keep up Pogue.

The club's assets cannot be used as security on Glazer personal loans because they have already been used as security on the Bonds.

 

[Rood]

Seems to me that their opponents are inventing any old excuse to be angry; debt, PIKS, potential dividends, not buy superstar players, etc. The list will grow as they see fit.

Bingo !

 

[datura]

Bingo !

Yeah, it's nothing to do with the ticket price increases, ACS etc..

 

[GCHQ]

Keep up Pogue.

The club's assets cannot be used as security on Glazer personal loans because they have already been used as security on the Bonds.

Carrington is available.

 

[datura]

Keep up Pogue.

The club's assets cannot be used as security on Glazer personal loans because they have already been used as security on the Bonds.

Any new loan could be secured against the shares like the PIKs were. Therefore there would be no difference in the position other than the interest rate would be lower and the debt stabilised.

 

[Rood]

Carrington is available.

True - you have any idea how much it might be worth?

Any new loan could be secured against the shares like the PIKs were. Therefore there would be no difference in the position other than the interest rate would be lower and the debt stabilised.

Yes I know that but it is important to note that is very different to the loan being secured directly on the club's assets - I think many people probably dont understand the difference.

 

[Rood]

Yeah, it's nothing to do with the ticket price increases, ACS etc..

These are legitimate concerns and if people just focused on them, then I would have no problem with that.

It is the other invented concerns that I have a major issue with.

 

[datura]

Yes I know that but it is important to note that is very different to the loan being secured directly on the club's assets - I think many people probably dont understand the difference.

Maybe you'd be better explaining rather than being patronising then?

This thread definitely brings out the worst in people, although it is far better to read when you put Crerand, Ciderman and TMRD on ignore and can concentrate on those who actually have something of interest to contribute.

 

[datura]

These are legitimate concerns and if people just focused on them, then I would have no problem with that.

It is the other invented concerns that I have a major issue with.

It's not really 'invented' concerns though - people interpret situations differently. Just because you don't agree doesn't make it any less legitimate to them.

 

[Rood]

Some things might be down to opinion but many of the major concerns put forward by people are completely invented and fundamentally wrong on many levels.

to be fair to andersred he has actually done a fair bit (maybe not enough) to dispell a lot of the most common myths about the business side of the club.

 

[GCHQ]

True - you have any idea how much it might be worth?

Maybe £40m which wouldn't be much use for a £200m+ loan. It is possible, so long as certain conditions are met, for Red Football Ltd to take on further debt but the bond holders would have to be informed so I think we can completely rule out the possibility that further debt has been secured against the club/Red Football and its assets.

 

[TheMancRedDevil]

Maybe you'd be better explaining rather than being patronising then?

This thread definitely brings out the worst in people, although it is far better to read when you put Crerand, Ciderman and TMRD on ignore and can concentrate on those who actually have something of interest to contribute.

I think I have posted about five times in the last month on here. - I think you've missed me datura. Honestly mate, you're not my type, though.

This debate is largely a dead duck as far as I'm concerned now.

The Glazers have personal debts - as do most people in the world. So what? They revel in debts, they don't see them the same way that we do.

My personal feeling is that they have taken out another loan but this one will be over a longer term (possibly 15-20 years or something) and it will be at a much lower interest rate than the PIKs.

What this means for the Glazers (and for us) is that they don't have the desperate need to take out every single penny to which they are entitled in order to get them cleared by 2017. This relieves a lot of pressure both on them and on the club.

 

[Commadus]

I have not been keeping up with this but Red Football JV had the PIK which was secured against the shares in Red Football ie Mancheser United. Now the PIK has been paid off is there any new debt on Red Football JV or is it now debt free?

 

[peterstorey]

Yes I know that but it is important to note that is very different to the loan being secured directly on the club's assets - I think many people probably dont understand the difference.

What is that subtle difference? If the loan is secured on RFJV they own Man Utd plc and all its assets.

 

[Crerand Legend]

I think I have posted about five times in the last month on here. - I think you've missed me datura. Honestly mate, you're not my type, though.

This debate is largely a dead duck as far as I'm concerned now.

The Glazers have personal debts - as do most people in the world. So what? They revel in debts, they don't see them the same way that we do.

My personal feeling is that they have taken out another loan but this one will be over a longer term (possibly 15-20 years or something) and it will be at a much lower interest rate than the PIKs.

What this means for the Glazers (and for us) is that they don't have the desperate need to take out every single penny to which they are entitled in order to get them cleared by 2017. This relieves a lot of pressure both on them and on the club.

You know what TMRD you could be right

 

[Rood]

What is that subtle difference? If the loan is secured on RFJV they own Man Utd plc and all its assets.

There is a big difference between having security over physical assets (Old Trafford etc) as opposed to security on the shares of a company (RFJV).
That of course is the reason that the interest rate on the PIK was so high compared to the senior debt/bond, because the level of security is much weaker and it is seen as a bigger risk

 

[Sir A1ex]

I think I have posted about five times in the last month on here.

Fifty, actually

 

[Commadus]

There is a big difference between having security over physical assets (Old Trafford etc) as opposed to security on the shares of a company (RFJV).
That of course is the reason that the interest rate on the PIK was so high compared to the senior debt/bond, because the level of security is much weaker and it is seen as a bigger risk

Whats stopping Red Football JV selling their interest in Red Football (which owns MU) for a nominal sum?

 

[Sir A1ex]

The other is about the point of view that had previously been put forward by MUST/andersred/etc and it is on that score that people like myself have every right to gloat as they have been proven to be completely wrong (and not for the first time either).

There are two things wrong with that, as has been repeatedly pionted out in this thread:

1) Most people on both sides thought it was likely they would take out the dividend to pay the PIKs. Apologies if you were a lone voice saying it wouldn't happen, but if you're giong to gloat, then at least include GCHQ etc in your list of people who "have been proven to be completely wrong".

2) As I've been pointing out to GCHQ, who I think finally accepted the point, without knowing where the money has come from, there's no evidence that anybody has been proved right or wrong.
If they have simply refinanced on slightly more favourable terms, then that is a long way from "paying off the debt", and in terms of the question of whether they might draw the dividend to pay debt down, we're in pretty much the same place as we were. Moving the debt around was obviously always an option, but doesn't change anything in terms of whetehr and how they can afford to pay it off.
If you can show that they have used their own capital to pay off the PIKs, then you are right, but whenever anybody suggests that we find out how teh PIKs were repaid they get told to mind their own business, so we are left in the dark unfortunately.